By Kurt R. Karst –      

Earlier today, the U.S. Supreme Court issued its highly anticipated opinion in Wyeth v. Levine.  By a 6-3 vote (Justice Alito, Chief Justice Roberts, and Justice Scalia dissenting), the Court ruled that FDA labeling approval does not preempt state laws.  We previously reported on the background and Oral Argument in this case.  Below is the Court’s syllabus from the opinion (which totals 80 pages).  We anticipate a future post once we have had a chance to digest the ruling.

(a) The argument that Levine’s state-law claims are pre-empted because it is impossible for Wyeth to comply with both the state-lawduties underlying those claims and its federal labeling duties is rejected.  Although a manufacturer generally may change a drug labelonly after the FDA approves a supplemental application, the agency’s“changes being effected” (CBE) regulation permits certain preapproval labeling changes that add or strengthen a warning to improve drug safety.  Pursuant to the CBE regulation, Wyeth could have unilaterally added a stronger warning about IV-push administration,and there is no evidence that the FDA would ultimately have rejected such a labeling change.  Wyeth’s cramped reading of the CBE regulation and its broad assertion that unilaterally changing the Phenerganlabel would have violated federal law governing unauthorized distribution and misbranding of drugs are based on the fundamental misunderstanding that the FDA, rather than the manufacturer, bearsprimary responsibility for drug labeling.  It is a central premise of the Food, Drug, and Cosmetic Act (FDCA) and the FDA’s regulationsthat the manufacturer bears responsibility for the content of its labelat all times.

(b) Wyeth’s argument that requiring it to comply with a state-lawduty to provide a stronger warning would interfere with Congress’ purpose of entrusting an expert agency with drug labeling decisions is meritless because it relies on an untenable interpretation of congressional intent and an overbroad view of an agency’s power to preempt state law.  The history of the FDCA shows that Congress didnot intend to pre-empt state-law failure-to-warn actions.  In advancing the argument that the FDA must be presumed to have established a specific labeling standard that leaves no room for different state-law judgments, Wyeth relies not on any statement by Congress but on the preamble to a 2006 FDA regulation declaring that statelaw failure-to-warn claims threaten the FDA’s statutorily prescribed role.  Although an agency regulation with the force of law can preempt conflicting state requirements, this case involves no such regulation but merely an agency’s assertion that state law is an obstacleto achieving its statutory objectives.  Where, as here, Congress has not authorized a federal agency to pre-empt state law directly, theweight this Court accords the agency’s explanation of state law’s impact on the federal scheme depends on its thoroughness, consistency,and persuasiveness. Cf., e.g., Skidmore v. Swift & Co., 323 U. S. 134.  Under this standard, the FDA’s 2006 preamble does not merit deference: It is inherently suspect in light of the FDA’s failure to offer interested parties notice or opportunity for comment on the preemption question; it is at odds with the available evidence of Congress’ purposes; and it reverses the FDA’s own longstanding positionthat state law is a complementary form of drug regulation without providing a reasoned explanation. Geier v. American Honda Motor Co., 529 U. S. 861, is distinguished.

By Wes Siegner –  

In April 2005, FDA published guidance for industry on dietary supplement labeling, “A Dietary Supplement Labeling Guide.”   Chapter II of this guidance contains FDA’s views on how to fulfill the statement of identity requirement for dietary supplements contained in 21 C.F.R. § 101.3(g). 

This portion of the guidance contains the following question and answer:

Can the term "dietary supplement" by itself be considered the statement of identity?

No. This term by itself is not appropriately descriptive to be a statement of identity.  21 CFR 101.3(g)

The regulation cited is at best ambiguous as to the correct answer to the question posed.  Nonetheless, prior to the issuance of the guidance in 2005 the vast majority of dietary supplement products were labeled with “Dietary Supplement” as the only statement of identity, and this situation has not changed since FDA issued the guidance, although some companies have changed their labels to comply with the guidance.  FDA has, to our knowledge, not taken enforcement action to force industry to change, which likely explains the lack of any real interest in the question of whether the guidance is correct as to whether the term “dietary supplement” alone meets the applicable statutory and regulatory requirements.

This question became a sticking point in recent efforts to settle a multistate investigation of a dietary supplement manufacturer, and the state regulatory authorities involved were understandably confused by FDA’s guidance.  As a result, this firm submitted our analysis of the relevant statutory and regulatory requirements to FDA’s Center for Food Safety and Applied Nutrition ("CFSAN") by e-mail, the relevant substance of which follows.

Section 403(s)(2)(B) of the Federal Food, Drug and Cosmetic Act ("FDC Act"), 21 U.S.C. § 343(s)(2)(B), provides that a dietary supplement is misbranded if “the label or labeling of the dietary supplement fails to identify the product by using the term ‘dietary supplement,’ which term may be modified with the name of such an ingredient.”  Therefore, the statute, which is controlling, specifies that the use of  "dietary supplement" alone as the statement of identity is acceptable, but that other words may be added.

FDA’s regulation, if read alone without reference to the preamble, is less clear and is likely the source of the confusion in the guidance document.  The applicable regulation states that “[d]ietary supplements shall be identified by the term 'dietary supplement' as a part of the statement of identity … .”  21 C.F.R. § 101.3(g).  It is possible to read this regulation as meaning that the statement of identity must include more than just the words "dietary supplement."  However, this reading would conflict with the statutory wording.  FDA’s preamble to the final rule establishes that there is no inconsistency, and that the correct reading of § 101.3(g) is that the use of  the term "dietary supplement" alone as the statement of identity is acceptable.

FDA’s preamble states that:

Section 201(ff)(2)(C) of the act, in defining the term “dietary supplement,'' mandates that such a product must be labeled as a dietary supplement. Section 403(s)(2)(B) of the act states that a food shall be deemed to be misbranded if it is a dietary supplement, and the label or labeling of the dietary supplement fails to identify the product by using the term “dietary supplement, which term may be modified with the name of such an ingredient.'' Section 403(i)(1) of the act requires that a food label must bear the common or usual name of the food, that is, a statement that identifies the food. Dietary supplements are labeled subject to the provisions of section 403(i)(1) of the act (see the last sentence of section 201(ff) of the act). Thus, when the act is read in its entirety, it is clear that sections 201(ff)(2)(C), 403(s)(2)(B), and 403(i)(1) of the act require that the statement of identity of a product that is marketed as a dietary supplement identify the product as such.

FDA's longstanding regulations lead directly to this result. Section 102.5 (21 CFR 102.5) sets out how the common or usual name of a nonstandardized food is to be derived. Under this provision, the common or usual name must accurately identify or describe, in as simple and direct terms as possible, the basic nature of the food. The basic nature of a dietary supplement is that it is a dietary supplement.  This is the point made in both sections 201(ff)(2)(C) and 403(s)(2)(B) of  the act.  Thus, under 102.5(a), the common or usual name of these products must, at least in part, identify them as a dietary supplement.

62 Fed. Reg. 49,826, 49,827 (Sept. 23, 1997).  The preamble clarifies that the words "as part of" in § 101.3(g) mean that the statement of identity should include the term "dietary supplement" "at least in part."  Stated differently, the preamble establishes that the correct reading of § 101.3(g), consistent with the statute, is that "dietary supplement" satisfies the statement of identity requirement under § 101.3(g), but that additional words may be included.

Consistent with our reading of the statute and regulation, in its press release concerning this rule, the Department of Health and Human Services stated that “[a] statement of identity will appear on the front panel of the product label. The statement must use the terms "dietary supplement" or a term identifying the contents of the product, such as "Vitamin C supplement" or "Herbal supplement."   

A senior official within CFSAN, has confirmed that CFSAN has considered this issue and agrees that FDA’s guidance is incorrect as to the answer to the question posed in the guidance, “[c]an the term ‘dietary supplement’ by itself be considered the statement of identity,” and that the correct answer should be “Yes” rather than “No.”  However, FDA has also indicated that the agency is not likely to correct this guidance anytime in the near future. 

Given the increased number of multistate investigations of the supplement industry, manufacturers responsible for labeling dietary supplements should be aware that Texas  authorities, even after learning that FDA agrees that the guidance is incorrect and being reminded that such guidance is not binding on FDA or industry, have stated their intent to enforce Texas’ view of the statement of identity requirement as expressed in the guidance.  Other states involved in the multistate investigation appeared to understand that, given the lack of ambiguity in the FDC Act, FDA’s acknowledgement of the error, and the lack of any state requirement of a different statement of identity, there is no legal basis for state enforcement that is inconsistent with the FDC Act.  Should Texas or any other state attempt to enforce the erroneous view expressed in the FDA guidance, the manufacturer targeted would have a strong basis for refusing to comply and litigating this issue.

By Cassandra A. Soltis & Wes Siegner –  

Previously we have commented on FDA’s draft guidance originally issued on January 2, 2008 and recently reissued again in draft form on December 11, 2008 (here and here).  Both draft guidance documents assert that, in the Dietary Supplement and Nonprescription Drug Consumer Protection Act of 2006, Congress's use of the term "domestic address" in sections 403(y) and 502(x) of the Federal Food, Drug, and Cosmetic Act ("FDC Act") is “a clear and unambiguous directive” that all labels for dietary supplement and OTC drug products (other than those approved through the NDA process) be revised to permit consumers to report adverse events.  Industry has submitted numerous comments pointing out that FDA’s reading of the “domestic address” requirement is obviously flawed and contradicted FDA’s longstanding regulations, 21 C.F.R. §§ 101.5(d) and 201.1(a), requiring that all dietary supplement and OTC drug labels bear the “name and place of business” of the manufacturer, packer or distributor of the product.

FDA’s two February 24, 2009 Federal Register publications (here and here) estimate the cost in terms of hours of compliance with FDA’s draft guidance, which, according to a March 2, 2009 Tan Sheet article, FDA states is equivalent to just under $44M for dietary supplements and $40M for OTC drugs.  These estimates beg the question – why would there be any cost at all when FDA has issued its views in non-binding draft guidance, the views expressed in the draft guidance are flatly contradicted by existing FDA regulations, and there is little, if any, risk that FDA would ever enforce the “domestic address” requirement?  Those companies that understand the legal requirements and FDA’s enforcement options would likely choose to do nothing, for a cost of $0.

FDA’s labeling initiative is a flawed effort to badger the dietary supplement and OTC drug industries into making labeling changes that are irrational, both from a cost and a public health perspective.  FDA’s argument is that consumers, armed with a phone book or even the Internet, need more information than the name and place of business of the company to be able to report an adverse event, and that Congress recognized the problem and therefore used the term “domestic address” to clarify that the name and place of business was insufficient.  This argument ignores the lack of any evidence of congressional intent as well as the intent of FDA’s “name and place of business” regulations, which are also aimed at company contact and have successfully achieved that goal for decades.  In addition, FDA’s view runs counter to the increased access to contact information in the modern world, and the ability of consumers to report adverse events to medical professionals and to FDA, should they somehow be unable to locate the company or, as is usually the case, prefer not to report to the company.  The labeling changes FDA seeks would have no effect on consumer reporting, but would cost industry millions.

Finally, industry should understand that the closing sentence of both draft guidances, that “FDA intends to begin enforcing the [labeling] requirements . . . on or after January 1, 2010,” is either a bluff or was written by someone who does not understand the non-binding nature of FDA guidance (see 21 C.F.R. § 10.115(d)(1)).  Any effort to enforce the “domestic address” requirement would be at least an implied threat of litigation, which would force the agency to confront several major obstacles, not the least of which is the logic of its own existing “name and place of business” regulations and the non-binding nature of FDA’s guidance, all for a cause that must be of questionable merit even to those within the agency.  Even assuming FDA might push to enforce the requested label changes, convincing attorneys at the Department of Justice that such a case would be worth bringing would be difficult, if not impossible.  The risk of litigation would be at best remote, and therefore the threat of litigation of little use as an enforcement tool.

The most likely outcome of FDA’s labeling initiative is that there will be little if any change in labels and therefore no cost to industry.  These days, no added costs would be very good news.

By Riëtte van Laack –

The Eastern District Court of California enjoined California from enforcing California's Penal Code Section 599f against federally inspected swine slaughterhouses on the ground that section 599f is expressly preempted by the Federal Meat Inspection Act (“FMIA”). 

Section 599f prohibits a slaughterhouse from buying, selling or receiving nonambulatory animals for human consumption, and requires that any nonambulatory animal be euthanized immediately.  In contrast, the FMIA and its implementing regulations allow slaughterhouses to set aside disabled or fatigued animals (other than cattle) for inspection. 

The FMIA contains an express preemption clause specifically limiting the states in their ability to govern meat inspection and labeling requirements of any federally inspected establishment. 21 U.S.C. § 678.  The preemption clause does not limit states from regulating what types of meat may be sold for human consumption.

Section 599f would alter the federally mandated procedure for nonambulatory animals.  Because that section’s prohibition “differs from” and is “in addition” to FMIA requirements, the Court held that the section is expressly preempted by the FMIA.  California argued that Section 599f did not impose additional inspection requirements, but rather regulated the “type of meat” which may be sold for human consumption in California.  The Court summarily dismissed this argument because a “nonambulatory pig” is not “type of meat.”  Moreover, the Court found that the FMIA ensures the safety of meat and protects the health of the consumers, including California’s citizens.

By Cassandra A. Soltis –

A settlement agreement reached between numerous state attorneys general and Coke, Nestle, and Beverage Partnership Worldwide makes clear that it is not just the Federal Trade Commission that is scrutinizing weight loss claims.  The target of the attorneys general action is Enviga, a green tea beverage that is touted as having “negative calories,” meaning that calories are burned by simply drinking the product.  Marketing for Enviga also implied that users of the product will lose weight.  As part of the settlement agreement, whenever “negative calories” or similar claims are used in the marketing of either Enviga or any “similarly formulated product,” the companies must make clear that weight loss cannot be achieved absent diet and exercise.   

As support for the “proven” negative calorie claims, the companies cite to a small study on healthy individuals that lasted only three days.  The study subjects, whose ages ranged from 28-35 years old, were in the normal weight range.  Although some study participants burned additional calories by drinking 3 cans of Enviga per day, none experienced weight loss.  Furthermore, the study did not find that the calorie-burning effect could be maintained for an indefinite period. 

The companies will pay $650,000 to the states.  The Franklin Circuit Court will review the final settlement documents for approval.  For more information, see the press release from the Attorney General of Kentucky here.

By Susan Matthees and Jeff Wasserstein –

Although the stimulus bill that President Obama recently signed into law received significant attention for its economic implications, less noticed was Title XIII of the stimulus bill, entitled the "Health Information Technology for Economic and Clinical Health Act" or the "HITECH Act."  The HITECH Act includes a provision related to the HIPAA Privacy Standards that will restrict certain communications made by pharmacies and other providers relating to pharmaceutical products.

Prior to the HITECH Act, communications made by pharmacies or other providers to recommend alternative treatments or therapies or to recommend refilling prescriptions were considered to be communications for the purposes of "health care operations" and thus were permitted without patient authorization, even if a third party was funding the communication.  Thus, a manufacturer could without a patient authorization pay a doctor or pharmacy to send prescription refill reminders to patients as well as pay a doctor or pharmacy to recommend an alternative medication – see HIPAA Frequent Questions.  However, the HITECH Act limits marketing that is based on protected health information.  Under the HITECH Act, if a third party is paying for the communication, absent an authorization a pharmacy or provider can only send such a communication to a patient who has already been prescribed the drug or biologic.  Thus, manufacturers can continue to pay for refill reminders, but not for alternative drug recommendations.  This limitation applies to covered entities and business associates, and thus would apply to pharmacies, physicians, health plans, as well as pharmacy benefit managers.

The Act also will also change liability for business associates.  Business associates contract with entities that must comply with the HIPAA Privacy Standards to provide services on behalf of the covered entity.  Prior to the stimulus bill, business associates were not liable under the civil or criminal penalty provisions of HIPAA, and were only liable for breach of contract (the business associate agreement) if they violated the provisions of the contract.  However, the HITECH Act makes business associates directly subject to HIPAA enforcement.

Pharmaceutical companies should take careful note of these new provisions, as it may significantly impact their marketing practices.  These provisions go into effect 12 months from the signing of the stimulus package, or February 17, 2010.

By Douglas B. Farquhar –      

More than nine years after passage of federal legislation that would permit individuals to legally import prescription drugs from Canada, the Obama Administration appears ready to open the door to importation.  Prior administrations, including President Clinton’s, prevented individuals from legally importing prescription drugs.  We briefly mentioned this development in a recent post on President Obama’s proposed budget, but we felt it deserved more detailed attention.

The Federal Food, Drug, and Cosmetic Act (“FDC Act”) generally prohibits importation of drugs by individuals, and explicitly prohibits the reimportation of drugs manufactured in the United States by individuals or entities other than manufacturers.  In the 1990’s, numerous individuals in the United States began importing prescription drugs (meaning finished products, as opposed to Active Pharmaceutical Ingredients) from Canada, by traveling to Canada and purchasing drugs in pharmacies there, or by mail order, either through Internet websites or through telephone purchases.  Several store-front operations opened in cities across the United States.  The stores facilitated these transactions by accepting prescriptions from customers and then arranging for the prescriptions to be filled by linked Canadian pharmacies and shipped to customers.  Individuals in the United States tend to import brand-name drugs, rather than generics, because the prices of generic drugs in the United States are favorable compared to those in Canada, while many brand-name drugs are much less expensive in Canada than in the United States.  FDA initiated legal action against one chain of these storefront operations (Rx Depot), and successfully sought an injunction shutting down the store and securing financial penalties against it.

In 2000, Congress, as part of the appropriations bill for FDA, included a provision allowing personal importation of prescription drugs if the Secretary of Health and Human Services (acting on behalf of FDA) demonstrated that “reimportation poses no additional risk to the public’s health and safety.”  Likewise, in the 2003 Medicare Prescription Drug, Improvement, and Modernization Act, a provision was enacted that required a system to be created for importation of prescription drugs from Canada, upon certification of safety and cost savings.  The provisions, codified in Section 804 of the FDC Act, are only effective if the Secretary of Health and Human Services (who has authority over FDA) certifies safety.

FDA has long opposed permitting individual imports of prescription drugs except under very limited conditions that do not include drugs which are approved for use in the United States.  Successive Secretaries of HHS have decided, therefore, that adequate protections of safety are not possible.

However, the recent budget proposal for FDA issued by the Obama Administration states that the budget “supports the Food and Drug Administration’s (FDA’s) new efforts to allow Americans to buy safe and effective drugs from other countries.”  Apparently, this is a reference to Section 804’s provisions, and may signal that officials appointed by President Obama are willing to open the gates to legal importation of drugs from Canada.

By Kurt R. Karst –     

Actavis Elizabeth LLC (“Actavis”) has sued FDA after the Agency refused to accept the company’s ANDA for a generic version of the ADHD drug VYVANSE (lisdexamfetamine dimesylate) Capsules earlier this year.  FDA’s Orange Book shows that VYVANSE is a Type 1 new molecular entity covered by a period of 5-year New Chemical Entity (“NCE”) exclusivity, as well as another period of 3-year exclusivity and two patents scheduled to expire on June 29, 2023.  The VYVANSE labeling states that the drug product is a therapeutically inactive pro-drug that is metabolically converted to dextroamphetamine, a previously approved drug (e.g., ADDERALL).  According to the Actavis complaint, which was filed in the U.S. District Court for the District of Columbia, the company submitted an ANDA containing a Paragraph IV certification to FDA on January 28, 2009, and on February 6, 2009, FDA informed Actavis that the Agency refused to file the ANDA in light of FDA’s award of NCE exclusivity for VYVANSE.

Actavis is effectively challenging FDA’s policy on the availability of NCE exclusivity for metabolically converted drugs.  FDA stated in the preamble to the Agency’s 1989 proposed regulations implementing the Hatch-Waxman Amendments that:

A compound (other than an ester) that requires metabolic conversion to produce an already approved active moiety is considered a “new molecular entity,” . . . and will be considered a new chemical entity entitled to 5 years of exclusivity.  FDA will consider whether a drug contains a previously approved active moiety on a case-by-case basis.

FDA, Proposed Rule, ANDA Regulations, 54 Fed. Reg. 28,872, 28,898 (July 10, 1989). 

Actavis argues that FDA should not have granted 5-year NCE exclusivity for VYVANSE, and that “FDA’s blanket distinction between covalent derivatives and non-covalent derivatives for purposes of awarding NCE exclusivity is inconsistent with the FDCA, its legislative history and FDA’s own regulations.”  Actavis’ complaint requests that the court: (1) enter judgment declaring that FDA’s grant of NCE exclusivity for VYVANSE and refusal to accept the company’s ANDA is arbitrary, capricious and contrary to law; and (2) enter an injunction directing FDA to rescind the VYVANSE 5-year exclusivity and accept the Actavis ANDA as of January 28, 2009.   

By Alan M. Kirschenbaum –

Last week we reported on the Obama Administration’s 10-year budget proposal, focusing on the Department of Health and Human Services budget.  As noted, the budget establishes a reserve fund of over $630 billion over 10 years to finance health care reform. 

$316 billion of this reserve fund would be financed by health care savings, some of which would result from significant changes in the regulatory landscape for prescription drugs.  First, under the Medicaid Rebate Program, the minimum rebate for innovator drugs would increase from 15.1 percent to 22.1 percent of average manufacturer price (“AMP”).  Also, Medicaid rebates would be payable for drugs dispensed by Medicaid managed care plans, which are currently exempt from rebates under the statute.

Second, a “regulatory, scientific, and legal pathway” would be established for the approval of generic biologicals.  The budget document assures that a period of exclusivity would be guaranteed for the innovator biological product, consistent with principles in the Hatch-Waxman provisions applicable to non-biological new drugs, but it does not indicate the proposed length of the exclusivity period.  Brand biological manufacturers would be prohibited from “ever-greening” – i.e., reformulating existing products in order to restart the exclusivity process.

Third, the budget "supports the Food and Drug Administration’s (FDA’s) new efforts to allow Americans to buy safe and effective drugs from other countries . . . ."  This cryptic statement appears to refer to the importation of finished pharmaceuticals, though the reference to FDA's "new efforts" is puzzling since FDA to date has prohibited such imports.  The budget does not provide any detail on what imports would be permitted, or how importation would be reconciled with FDA's efforts to "make . . . medical products safer" – – a goal identified in the very next sentence of the budget.

Fourth, drug companies would be prohibited from blocking the approval of generic drugs through anticompetitive agreements and collusion between brand name and generic drug manufacturers.  As we recently reported, such “pay for delay” arrangements are the subject of a recent Federal Trade Commission complaint and legislation introduced in the U.S. Senate. 

In addition to these drug-specific provisions, the reserve fund would be financed through savings from a number of payment reforms under Medicare and Medicaid, including reducing Medicare subsidies to Medicare Advantage plans by changing to a competitive system where payment is based on an average of plans’ submitted bids; reducing overpayments and fraud under Medicare (including Part D) and Medicaid; introducing pay-for-performance incentives into Medicare hospital inpatient payment; reducing hospital readmissions through incentives and penalties; and reforming the Medicare physician payment system to incentivize quality and efficiency.

By Kurt R. Karst –      

Over the past few weeks, we have posted (here and here) on citizen petitions submitted to FDA requesting that the Agency address whether the 30-month stay provisions of the Hatch-Waxman Amendments apply to a pending ANDA for a generic version of an old antibiotic drug, which ANDA contains a Paragraph IV certification to a patent listed in the Orange Book in accordance with § 4(b)(1) of the QI Program Supplemental Funding Act of 2008 (“QI Act”).  In the latest (third) citizen petition submitted to FDA concerning this issue, Hoffmann-La Roche and Roche Palo Alto LLC request that FDA address the issue with respect to another old antibiotic drug –  CELLCEPT (mycophenolate mofetil) Capsules and Tablets – for which U.S. Patent #4,753,935 was submitted to FDA for Orange Book listing in accordance with the QI Act.  Apotex reportedly submitted ANDAs (containing a Paragraph IV certification to the '935 patent) seeking approval for generic versions of Roche's CELLCEPT products and Roche sued Apotex within the statutory 45-day period.

Roche’s petition raises some of the same arguments raised in the previously submitted petitions concerning DORYX (doxycycline hyclate) Delayed-Release Tablets and SOLODYN (minocycline HCl) Extended Release Tablets; namely, that the plain language of the QI Act requires application of the 30-month stay provisions of the original Hatch-Waxman Amendments, rather than the version of the statute amended by the Medicare Modernization Act, which limits 30-month stays such that a generic applicant with a pending ANDA that amends its application to add a Paragraph IV certification to a later-listed patent is not subject to a 30-month stay in connection with that certification.  The Roche petition also argues that FDA should interpret the QI Act such that patents listed pursuant to QI Act § 4(b)(1) should be treated as having been filed with the original NDA, thus providing for 30-month stay availability.  Medicis makes a similar argument in the SOLODYN petition, but argues that patents covering old antibiotics listed in the Orange Book in accordance with QI Act § 4(b)(1) should be treated as having been filed in the original ANDA, instead of in an amendment.

Both Actavis and Teva have submitted comments requesting that the Agency deny such petitions and determine that a 30-month stay is not available. 

By Cassandra A. Soltis & Alan M. Kirschenbaum – 

Today the Obama Administration released a summary of its 10-year budget proposal  entitled “A New Era of Responsibility – Renewing America’s Promise.”  The document provides a high level outline of priorities – details reportedly will be released in April.  For FY 2010, the budget includes $76.8 billion for the Department of Health and Human Services (HHS).  Highlights of the HHS budget include the following:

• Health care reform:  The budget establishes a reserve fund of over $630 billion over 10 years to finance reform of the health care system to bring down costs and expand coverage.  The document acknowledges that this amount is a “down payment,” and additional funding will be needed to expand coverage to the uninsured.

• Lowering drug costs and improving safety of food and medical products:  The budget would establish a new regulatory pathway for generic biologics, and strengthen FDA’s efforts to ensure the safety of food and medical products, including those imported from other countries.  Over $1 billion will be included for FDA’s food safety efforts.

• Federal healthcare program integrity:  The Budget will dedicate additional resources to improve oversight and program integrity of the Medicare prescription drug benefit (Part D), Medicare Advantage, and Medicaid.  The Budget will also “strengthen[] the Medicare program by encouraging high quality and efficient care, and reducing excessive Medicare payments.”

• Medicare and Medicaid research agenda:  New funding will be allocated to demonstration and pilot projects to evaluate payment reforms, ways to provide higher quality care at lower cost, and beneficiary education.

• Comparative effectiveness research:  Building on the $1.1 billion included in the recently passed stimulus bill for comparative effectiveness research, the budget will continue to fund research comparing the effectiveness of medical treatments.  This, combined with electronic health records, will “distill[] all available evidence on the outcomes of different treatment options into user-friendly pop-up alerts for physicians at the point of care.”

• Cancer and AIDS:  Over $6 billion will be allocated to the National Institutes of Health for cancer research to develop innovative diagnostics and treatments for cancer.  Increased resources will also be devoted to the detection, prevention, and treatment of HIV/AIDS. 

By John R. Fleder, Douglas B. Farquhar & Ricardo Carvajal –

The U.S. Attorney for the Eastern District of California  (Sacramento) has announced guilty pleas by two individuals for fraudulent activities in connection with their distribution of tomato products.  Allegedly at the direction of her superiors at SK Foods L.P., one individual intentionally shipped products that were adulterated due to excessive mold, and falsified data in corresponding Certificates of Analysis.  She faces up to 3 years in prison.  A second individual employed by Frito-Lay, Inc. received $160,000 in bribes for steering contracts for food products to SK Foods.  He faces up to 20 years in prison.  Sentencing is scheduled for April 28.  There is no allegation that the affected products posed any health hazard to consumers.

By John R. Fleder, Douglas B. Farquhar & Ricardo Carvajal –

FDA has obtained summary judgment and an order of permanent injunction against a Minnesota seafood supplier that was found to have had an inadequate HACCP plan for more than three years, in violation of FDC Act § 402(a)(4) and 21 C.F.R. § 123.6(g).  However, the Court’s Opinion deals a severe blow to FDA’s consistent track record of seeking injunctions that are worded so as to allow FDA to decide by administrative edict that the defendant’s business must be shut down, after entry of the Injunction, if FDA believes the company has violated the Injunction.

When FDA and the Justice Department seek injunctions for FDC Act violations, they will frequently seek a partial or total shutdown of the allegedly offending defendant until it can come into compliance with applicable legal requirements.  In addition, the standard FDA Consent Decree (and litigated Decree) has provisions governing what occurs when FDA subsequently decides that the Decree has been violated.  The typical Decree allows FDA to shut down the allegedly offending company merely by sending the company a letter stating that the company has continued to violate the law.  Upon receipt of that letter, the firm is generally required to shutdown its operations, with very limited right to get review from a court of that shutdown demand.  This provision is referred to as “letter shutdown authority.”

In this case, although FDA sought letter shutdown authority, the Court turned the standard FDA provision on its head.  The Injunction entered by the judge provides that if FDA does not approve of the defendant’s HACCP plan, “and if the FDA wishes to prevent defendants from beginning to operate the proposed business covered by the plan, the FDA must bring” an entirely new enforcement action against the defendant.  Thus, unlike the typical Decree, FDA cannot simply shut down a defendant when FDA believes the firm is in violation of the Decree.  Instead, the government must file (and prevail in) a second lawsuit against the defendant.

As noted by the court, there is no allegation that the defendant’s products posed any health hazard to consumers.  The case is U.S. v. Captain’s Select Seafood, Inc., 2009 WL 398081 (D. Minn.).  FDA’s press release is available here.

By Kurt R. Karst –      

Earlier today, FDA announced that the Agency was taking the unusual step of invoking its Application Integrity Policy (“AIP”) against Ranbaxy Laboratories Limited’s (“Ranbaxy”) Paonta Sahib manufacturing facility in India.  FDA takes such regulatory action under the Agency’s AIP procedures when FDA believes that a company’s actions raise significant questions about the integrity of data in marketing applications. 

According to FDA’s AIP letter to Ranbaxy, the Agency “has determined that [Ranbaxy] submitted untrue statements of material fact in abbreviated and new drug applications filed with the Agency.  These findings concern the submission of information, such as from stability test results in support of pending and approved drug applications, from the Ranbaxy Laboratories Limited site located at Paonta Sahib, Sirmour District, Himachal Pradesh, India . . . .”  FDA’s AIP letter asks Ranbaxy to cooperate with the Agency to resolve the questions of data integrity and reliability, which would include implementing a Corrective Action Operating Plan to provide assurance of the integrity and reliability of data from the Paonta Sahib facility.  Importantly, FDA notes in the AIP letter that:

In accordance with FDA policy, the Agency will assess the validity of the data and information in all of Ranbaxy's affected applications which contain data developed at the Paonta Sahib site. . . .  This means that the Agency does not intend ordinarily to conduct or to continue its normal substantive scientific review (including review of data and labeling) of any such pending application or supplement, or of any new application or supplemental applications filed after the date of this letter, that contain data developed at the Paonta Sahib site, during a validity assessment of that application.

FDA’s latest enforcement action against Ranbaxy follows the Agency’s September 2008 issuance of two Warning Letters and an import alert concerning drug products manufactured at several Ranbaxy manufacturing facilities, including Paonta Sahib.  In addition, as we previously reported, Ranbaxy has been under investigation by FDA and the Department of Justice, and has been scrutinized by Congress.  It has been reported that Ranbaxy’s troubles with FDA were one factor that led to the introduction of the 2008 FDA Globalization Act (“FDAGA”), which, as we recently reported, has been reintroduced in the 111th Congress.  FDAGA includes provisions for FDA inspections of manufacturing facilities, requirements for risk management plans, detailed supply chain requirements, greater recall authority for FDA, country of origin labeling, and requirements for testing of purity and identity for drug products, among many others. 

By James P. Ellison –

We previously reported on FDA's Federal Register notice adjusting its civil penalties for inflation and noted our prior posts on the new civil penalty authority given to FDA in the FDA Amendments Act.  As we explained in our earlier post, FDA's rule was published as a direct final rule, meaning that it would be withdrawn if significant adverse comments were received.  Today, FDA published a notice stating that no significant adverse comments were received and therefore, the increased penalty amounts will become effective on March 27, 2009.  While it has been quiet on the civil penalty front since our earlier post, we still see the possibility for increased civil penalty activity in the coming months.